And almost immediately after posting it, I started receiving an abnormally large amount of email feedback from Paypal haters. In fact, I’ve never encountered such strong anti-feelings for any service before.

Having used both services in the past with no problems whatsoever, I was very surprised to hear the overwhelming negative feedback towards Paypal.

I will never use Paypal again. After being a loyal customer for over 3 years, one day they decided to place a 6 month hold on my money for no reason. I couldn’t access over 20k in my account which I needed to pay my bills!

The above quote was just one of many emails I received in the past few months since my article went live. In the interest of full disclosure, I use Paypal Website Payments Pro to accept payments for my online store and I’ve never had any problems with them in 4+ years.

But the fact that so many readers have such strong anti-Paypal sentiments made me a little paranoid about my business. After all if you can’t process credit cards, you can’t make any money.

Paypal Horror Stories From People I Know

Most of the horror stories I’ve read about Paypal through surfing the web have to do with Paypal randomly limiting accounts or freezing funds.

Most of the complaints I’ve come across seem to indicate that Paypal will rarely hold your funds for longer than 6 months, but 6 months can be a long time if you need access to your money.

And once they freeze your funds, it doesn’t make sense to continue accepting money through Paypal if you can’t access it. In other words, once your account is frozen, you are pretty much screwed.

All of the stories that I’ve read online are from people that I don’t know personally or from people that I’ve never heard of before so I’ve been taking them with a grain salt.

However, I do have a few fellow blogging friends that have had their accounts frozen for no reason so I asked them for their side of the story.

In both cases with my blogging buddies, they had their accounts frozen after a big product launch. For one of them, Paypal limited their account by only allowing them to process $10,000 per day.

The other blogger had over 40K in funds frozen for 180 days. It seems as though Paypal doesn’t like seeing huge spikes in money being received into your account.

In the case of my online store, the revenue we receive is pretty steady and consistent from month to month but occasionally we get spikes of revenue when we hold a sale.

So, I decided to call my dedicated account manager at Paypal to get the story straight and here’s what I found out.

Why Paypal May Limit Or Freeze Your Account

After talking to my Paypal rep for over 30 minutes, they reassured me that it’s extremely rare that they ever place holds on user accounts.

They also told me that there were no limits on my account whatsoever and that I could process as much money as I wanted to in any given day.

When I brought up the stories about my blogging friends and how they had their accounts frozen, the representative assured me that the reasons for limiting an account vary greatly from user to user and largely depends on the situation.

Under the following circumstances, Paypal has certain triggers in place as a safeguard against fraud. Here are some reasons why some of these safeguards might be triggered

You’ve received an abnormally large amount of money in your account that is way above your average

Someone has filed a complaint to Paypal about your business

A series of chargebacks have been placed against your account

Your website has questionable content

You are in violation of Paypal’s use policy. For example if you sell drugs or anything illegal, you may get banned

Your account information is not up to date or your account is not fully verified

Someone has logged into your Paypal account from a strange location.

Your credit score is low or something with your background history makes you a higher risk customer

They have detected fraudulent activity on your account.

Preventing Paypal From Ever Limiting Your Account

Towards the end of my conversation with Paypal, they assured me one last time that only a very small fraction of a percent of people get their accounts frozen and that accounts are rarely frozen for the full 180 days.

They also recommended the following guidelines to greatly reduce the chances of this happening.

If you are expecting to receive a large sum of money, then you should call Paypal ahead of time so they expect to see the extra funds. In other words, if you are planning a large product launch, make sure you let them know ahead of time

When you first signup for Paypal Website Payments Pro, there’s a survey that you have to take. Make sure that you check off higher numbers in terms of how much money you anticipate making every month

Contact Paypal to make sure that your account is not limited in any way in terms of how much money you can accept per day. Sometimes limits are placed depending on various factors relating to your credit history or background checks

Make sure your name or the name of your business is on your Paypal account and that it exactly matches your bank account and credit cards.

Use the exact same addresses and phone numbers that match your bank account and credit cards

Always use trackable methods of shipping if you ship physical goods in case a dispute is filed against you

Make sure that your FEIN or social security number exactly matches the name of your business on the account

Link both a credit card and a bank account to Paypal

Does This Sound Like Too Much Trouble?

Here’s the bottom line how I see it. If you are in the business of selling informational or digital goods and your revenues are extremely lumpy, then I would go with a regular merchant account and gateway like eMerchant.

If you have low credit scores or any history of fraud or criminal activity, then go with a regular merchant account and gateway like eMerchant.

If you never want to deal with the possibility of getting your account frozen or limited, then go with a regular merchant account and gateway.

The main reason my wife and I use Paypal is because they offer an extremely convenient way to ship packages and accept Paypal payments with one easy to use interface. Paypal’s fees are higher than a traditional merchant account but the perks are worth it for our store.

But if you do decide to go with Paypal, it’s probably a good idea to give them a call to make sure that there aren’t any artificial limits on your account.

Ready To Get Serious About Starting An Online Business?

If you are really considering starting your own online business, then you have to check out my free mini course on How To Create A Niche Online Store In 5 Easy Steps.

In this 6 day mini course, I reveal the steps that my wife and I took to earn 100 thousand dollars in the span of just a year. Best of all, it's absolutely free!

104 thoughts on “Why Paypal Freezes Or Limits Accounts And How To Prevent This From Happening To You”

Comment navigation

The truth is,
if your account is limited/frozen for whatever valid/non-valid reasons,
it is as good as gone, as you won’t have the mental strength and power and perseverance to face Paypal’s series of hurdles to get your money back.

They have the power of a bank but none of the responsibilites.
They are their own judge, and jury, and litigator.

Hi Ben,
It’s my understanding that Paypal is NOT a “bank”, yet most think they are.
Which means, as I understand it, they are NOT bound by banking laws.
===What you are talking about is called “Skimming Float Interest”.
ALL banking institutes have always done that, but only overnight; your money is always guaranteed to be there when you require it.
Paypal, OTH, does things which have every appearance of the following:
—1. Slowing transactions, they retain control of the money in “Float”, meaning: the longer they delay any transactions, the more money they harvest off of each transaction. Ethical? Nope. Legal? Dunno–probably highly unethical at least.
—2. Freezing customer accounts Paypal operates:
All money in those accounts, is under their control; meaning, as long as it’s frozen, Paypal gets to reap Float interest.
—3. Demanding a link to customer’s other bank account, favoring that over a linked credit card.
They can rotate money out of/into any linked bank account;
NOT regulated by banking industry laws, not entirely.
By rotating money out of the actual bank account, Paypal takes Float interest the actual bank would otherwise have gotten. Customers may not even know it’s being done.
Paypal operates world-wide.
—4. Paypal CANNOT force a “cash advance” from a credit card, though, in order to grab Float interest; that is likely why they more frequently demand a link to customer’s bank accounts instead.
Also, Once Paypal has frozen a linked Credit card, that card is blocked everywhere Paypal operates accounting for any business; only way to get control of your linked credit card, is to Close your Paypal account it’s linked to, because their system refuses to allow it to be changed or Unlinked–I tried…it stayed blocked until I closed the Paypal account.
Paypal coerces people into gifting them bank account links, and their personal ID copies, too….not safe.
Anyone who calls customer assistance, never knows what country the customer service agent is–could be Pakistan, India, Ireland, etc. Not necessarily a bad thing, EXCEPT that there is no real guarantee of security, and every CSR contacted [about 8 of them in one night] gave Different reasons for Paypal freezing my Card and my Paypal account. Poor accountability and flip and coercive responses.
Customers who ask to be hooked up with an agent in the USA, get told, as I did, “You have to keep calling back, and take your chances that a USA agent will answer the call” [which is supposed to be illegal–it’s supposedly a law that if a customer needs to speak with an agent in the USA, whoever took the call is supposed to transfer the person to one].
Hope that helps.

I totally agree. They have just frozen mine, stating fraudulent activity?? No real explanation. Wth are they talking about? I asked for specifics but they wouldn’t give me any. I buy stuff on EBay (skin care) for my personal use and sell a cpl hundred dollars a year. That’s it. They are crooks.

I used PayPal successfully for several years and sold a LOT of merchandise on eBay. I sold motorcycle apparel like leather jackets and motorcycle helmets.

I changed absolutely nothing about what I was selling. Suddenly one day they froze my PayPal account stating that I was selling “suspicious” items. I called them and talked to multiple different reps, all rude and condescending and never actually answering my questions. They kept my money frozen in my account for the full 180 days and I then canceled my PayPal account when I finally got my money out.

This is the thing. I was not selling anything “suspicious”. I was selling the exact same leather jackets and motorcycle helmets I had been selling for years. I changed nothing about my business model and they totally screwed me. I was a great ebay and paypal customer, they both made a LOT of money from me, and with no good reason, they ruined my business on ebay. Once we could not offer PayPal as a method of payment, we could not sell on ebay.

You have been very blessed not to have had any issues with them. I have always had my own merchant account that I have used for my own websites, and only ever used PayPal due to they force you to if selling on ebay.

I don’t know if they have changed as I’ve not used them in about 6 years since they royally screwed me over.

Thank you for sharing Leigh. Totally know what you mean about rude and condescending and never actually answering questions. I stop selling on eBay but have to buy from there sometimes and now they have limited my account, not sure why so I can’t buy from eBay either. Wish someone would start an alternative.

Hope you fine , i have same issue with paypal they freez my paypal account and a notice show in my paypal account your account freez 180days and you withdraw you amount after 180days , i have 1440$ in my account can you tell me procedure how i withdraw my amount .

I would advise anyone with a Business to stay away from Paypal. Theres too much of a risk involved with them having complete control of your money. Would you really turn over all of your money and lifesavings to a complete stranger who offers you no guarantees about how they handle your money? Keep in mind thats what you are literally doing everytime you use them. They are not regulated by the government and they don’t have to play by the rules.

I had been with them for over 10 years as well and I sold a few items here and there. But I used my account for mostly buying on ebay. I had an incident where I became the victim of identity theft and fraud. Someone hacked into my account and used my account to purchase items. As a result of this Paypal froze my account. So while you may have been lucky thus far with not having any issues with having to deal with a limited account. I would keep an eye on my account. Recognize that things could change in the blink of an eye even if your account is ever compromised through no fault of your own. I just personally dont think its a risk worth taking.

I have used PayPal for several years without issue, yet this year was something different.

Apparently PayPal had limited my account due to notification of buyers reporting that they are not getting their merchandise. Not a single buyer of mine had notified me nor open any type of dispute with either PayPal or eBay.

So I contacted them and could not get a hold of anyone who can give me a clear answer. Not only that, they permanently restricted my access and holding my funds for 180 days! I am a business, I can’t wait that long to get access to that. It is so frustrating that PayPal doesn’t care no matter the years you have been with them. I have gotten nowhere with their support and am in need of getting back.

I did start reading somewhere on Auction Essistance that stealth is alternative to get back on? Is this true? Would this be a good way to get back on or will eBay find out?

I was a former paypal employee. When it comes to placing holds and limitations on accounts, they look at several indicators. Firstly I would like to state calling paypal to inform them you are receiving a large payment means dick! The person’s in the fraud department are the ones responsible for the limitations/holds. As I was one of those agents prior to their decent and disloyalty to to their employees and their customers.

So let’s say you received 10k, your account goes negative. Sadly based on PP’s rules that account is responsible for the funds. However with said they are not a bank and have no legal bounds to even make you pay that balance. So you can just open another account and bypass the balance.

When it comes down to what we look at to determine whether payments or accounts are fraudulent is by looking at your SSN, IP’s, device ID’s, flash shared objects, Visitor ID’s, credit cards, bank accts, phone numbers, and addresses. We also use feedback from ebay, complaint history, sales history and if people are shipping the items being sold to determine whether or not fraud is happening on accts.

It’s very easy to slip by PP’s security you just need to know what the people that work there are looking for. PP is a horrible company and they deserve to have their processes exsposed.

Been with paypal for ten years, last month i had two big transactions from selling locally Used Restaurant Equipment. Fucking paypal put restrictions on my account. Luckily, I transferred some of the funds to my Chase back business account and left some at Paypal. I was shocked how they can do that, It was my mistake to open a paypal Merchant account. I had a chase Merchant account prior to that , and made lots of transactions without any problem, but these paypal ass wholes will never been trusted again. Please please if you want to ba safe, Don’t ever do paypal , They can luck up your money and make you homeless. I will close my acc ASAP

I too have been cleaned out by PP. I have had paypal for a number of years on my website. I own the Company. Three months ago, PP asked me for a number of answers regarding my ID and Company Documents, which I emailed back to them as requested. Time ticked away, and then there were more questions and then time ticked away, with yet wanting answers in more detail. I started to smell a rat. I have subsequently deleted PP from my website and now use Shopify (thank goodness I set this up last year when PP conveniently crashed right before Xmas – not the first time, consequently loosing thousands of dollars over a few days before they managed to get it up again). PP still has $15.5k of mine, not much in the big scheme of things but it’s the principal. I’m seeking legal advice as to how to get it back plus compensation for restricting the flow of my business operations. If anyone is thinking about using PP for their business – don’t. I thoroughly recommend Shopify Payments. When I read all the comments on this stream, I must say that I’m shocked and horrified that PP can do this to small and big business alike. They obviously have too much money. I think that the best thing for people to do is boycott PP and kick them where it hurts. From a former and very pissed off PP user.

Paypal is really a fucking stupid company. I used Paypal more than 5 years. One day, I bought an iPad on eBay and PayPal requested for my IC and Credit Card Statement. After providing all the informations, they directly limit my account. I called them and a terrible idiot told me to employ a lawyer if I want to access the account. They said “If you can’t afford to have a lawyer, you will not able to use PayPal forever”. I used Paypal for so many years and they limit my account with no reasons. The reason is ‘This is our final decision and will not be appealed’. Idiot and terrible joker.

Paypal is really a fucking stupid company. I used Paypal more than 5 years. One day, I bought an iPad on eBay and PayPal requested for my IC and Credit Card Statement. After providing all the informations, they directly limit my account. I called them and a terrible idiot told me to employ a lawyer if I want to access the account. They said “If you can’t afford to have a lawyer, you will not able to use PayPal forever”. I used Paypal for so many years and they limit my account with no reasons. The reason is ‘This is our final decision and will not be appealed’. Idiot and terrible joker. They will be kind like bitches when they have business with you and will talk like shit if the business ended!

I am not a company. I am individual. They mustn’t limit the accounts with no reasons.

Adams Thompsonsays:

Oh! This is really marvelous.. It’s unbelievable how fortunate I feel after finding your website . For the past 4 months, I have been so miserable after losing my fiance to another man, and i tried all the probable means i could to reunite my family back, but nothing seems to work for me. My money situation worsened so much that I thought I’d have to file for bankruptcy. I had a huge amount of debt and I didn’t know what to do. Out of complete and total desperation, I contacted many of those so-called individuals who promised powerful magic, witchcraft or black magic. None of them worked and none were as magnificent, affectionate and warm as Dr Amigo has been. He is definitely special from the others and I felt instant hope and strength from hearing about the promises he had to offer. He carries an air of purity and great power that is as pure as fresh snow on the earth. I requested Dr Amigo most powerful spells and I was relieved right away that I had someone to solve my problems for me. His spells worked wonders and I am now back with my fiancee after 48 hours of his spell casting, just as he promised me. And my money troubles resolved itself after winning the lottery. I have no idea what I would have done without you being there to help me out. thank you so much for your help. For a look out for his article review type “Dr Amigo the online spell caster on Google”

My Friend Transfer money into my PayPal account and she ask my to transferred and withdraw this money from my bank Coz she’s lost the card and she’s need this money to pay her landlord next day as soon as I transferred money both accounts been blocked and put some limitations on it for no reason I can’t transfer this money back Coz of this limitation PayPal ask me for the passport and bank statement My passport is been lost now take new one takes a least 2 months I only want to send this money back to the perso who sends me what I can do to my friends she’s get her money back

They require now your SSN, if do not provide it they will freeze your account anytime with no reason at all, I spoke to them and they told me that do as they please and I was transfer the call to a manager who said the IRS told them to freeze all those accounts. How come PP froze your money with impunity?
For me PP is gone from my life.

I got my account frozen because I was trying to send money to my friend. They wanted to know what it was for and they requested so many documents. I provided what they needed, but they said I was too much of a risk. They closed it our completely.

I was wondering if it is possible to get back on? I was reading an article by Auction Essistance about stealth, but is it really legal? I use PayPal for all my transactions. Not having them is a devastating blow.

Hi. I just opened a paypal account and linked a debit card to it. I made a purchase of $220, few minutes later I received a mail that my account has been limited. Is there any hope of getting the money back because I was trying to buy for somebody, not my money. Please assist me.

Assholes have just frozen my account??? won’t give me a reason, and have left me without my diabetes medicine. I can’t believe they are just allowed to steal your money and shut you down like this without even explaining why??

They cut mine off from receiving funds and all I wanted to do was to receive payments of around $50-100 a week for writing short story commissions. They swore to me that there were no blocks, yet no one could send me money, and all those people could send money to other accounts so it HAD to be something with my account. I finally just gave up and had them pay me through dwolla.

Then about a month later, they randomly cut me off from making purchases, and all I did was make three purchases for <$15 each from a web site selling art assets for games. I can't figure out what is wrong, because none of the things you mention apply to my account.

Paypal says you can sign up for a “business account,” but they require an individual’s info and then consider it your personal account in actuality.

5 years ago, I had a dispute where a buyer sent back an ebay camera damaged and with missing accessories. Paypal refused to look at an email I had where the buyer admitted at least the missing accessories part, and held me responsible for refunding all the money. I refused. When they made harassing phone calls, I eventually told them they could take legal action if they wanted because unless they wanted to adjust the total, I wasn’t paying. I thought the matter was over.

Then recently, I had forgotten all about it. I’d started a company paypal so we could receive credit card payments. This went fine until we applied for Paypal Here, then Paypal told me they were freezing the company account and keeping the money unless I paid the full previous balance. Even though the money is not mine personally.

In calling them, I saw what a bad company they were. Every office told me a different thing. “Oh, you had to appeal that within 120 days [one office told me it was 180 days, another said 30 — they seriously didn’t know their own policy] and you didn’t”. “Yes I did”. “Oh, yes, you did. Oh well, we still can’t help.” Each department I called said I needed to talk to another department, which told me the previous department was all wrong. Corporations love to put real people in the position of middle man between their own departments It was a nightmare.

They told me my account was “not a business account” even though I signed up as one, so they call the money mine personally. They seem to think their policies somehow trump the laws in the U.S., it’s super weird.

This horror brought about by PayPal is a real nightmare. I receive Donations and Sponsorships for a non-profit cat shelter in Egypt, yet PayPal shut me down asking for about five different government documents to prove that I’m a “non-profit”.

I sent them the actual documents for this shelter – unfortunately, there is no US counterpart over here because they are a small shelter in their own country – yet even after sending them further documents from the Manager and Founder of the shelter, they would still not release the monies we need for the cat food, medicines, and shelter repair.

They next stated that, at the very least, I needed a “subordinate letter” from a US shelter, even though I told PayPal that I was not a shelter, I was a single, unemployed volunteer helping to accept the donations and cat sponsorships, which I then sent to the shelter via MoneyGram or Western Union. I’ve spoken to about seven different “Reps”, yet none are able to provide me with any answers regarding my account, or even why their so-called “PayPal-Egypt” is not working as promised three years ago. No responses, no cat food, no help for a struggling cat shelter.

I’ve provided all the information that I can provide, yet simply NO ANSWERS from these thieves! As one person stated below, PayPal is NOT a bank and any “regulatory guidelines” that they have to follow cannot be found anywhere. If they have the same “powers” as banks, then they also have the same the right and impunity to steal customers’ monies, and be answerable to NO ONE!

If anyone can provide me with a link to where the class action suit can be found, and provide me with at least one alternative to PayPal, I would be greatly appreciative, as well as many other PayPal victims.